The billionaire Houdini of commercial property

One scoop to start: Bob Sternfels has failed to win the support of a majority of McKinsey’s senior partners for a second term at the helm of the consulting firm in the second round of its leadership ballot, forcing him into a run-off against the head of its digital strategy business, Rodney Zemmel.

And one thing to start: JPMorgan Chase chief executive Jamie Dimon has shuffled his leadership team and consolidated some of the bank’s businesses, grooming potential candidates who could eventually take over from him.

In today’s newsletter:

• An Austrian money trail

• UAE deals face scrutiny in UK

• China’s ‘snowball’ derivatives melt

Signa’s missing millions

The collapse of billionaire René Benko’s property empire Signa has left lenders scrambling to recover what funds they can from the group.

But some of that money has been moved beyond their reach — and into the hands of entities controlled by Benko’s family.

Before its collapse last year, Signa estimated its property assets to be worth €28bn. The conglomerate’s portfolio has included stakes in London’s Selfridges and New York’s Chrysler building.

However, the debt-laden group unravelled into insolvency in the face of rising interest rates. Lenders eyeing billions of losses are raising questions about how the complex and leveraged network of companies was run under the 46-year-old Austrian founder.

In a pair of transactions last year before Signa’s collapse, one of the group’s companies transferred more than €300mn to two entities controlled by Benko’s family, according to financial documents reviewed by the FT.

Here’s how it worked: Signa Development, one of three companies that oversaw the group’s investments, lent €125mn to Laura Finance Holding GmbH and another €190mn to Laura Holding GmbH, as part of large outflows of money last year.

Both recipients are subsidiaries of the Innsbruck, Austria-based Laura Foundation. While its beneficiaries are not disclosed, the foundation is controlled by Benko’s mother, Ingeborg, according to Austrian public records. Benko’s daughter is called Laura.

The transaction escaped notice because the way Benko ran the Signa group meant large sums of money were often lent between corporate entities in its structure, without explanation to investors.

Details of the transfers to the Laura entities only came to light late last month, when after weeks of silence, creditors received documents from Signa’s lawyers relating to insolvency proceedings and the group’s balance sheet.

The administrator expects to recover none of the money, according to Signa Development’s insolvency filing.

The line between Benko’s personal interests and those of the company was often blurred.

Privately controlled shell companies linked to the Laura Foundation invested in developments alongside other Signa entities, and Signa Holding funded personal properties used by the tycoon and his private jet, according to corporate organisation charts seen by the FT.

And there has been no end to the bad news for Signa lenders. On Thursday, Signa Holding’s administrator said just €250mn of the more than €5bn of debt owed by the company was secured against tangible assets.

UK flags UAE deals

It was a rocky 24 hours for Emirati investment into the UK.

A previous deal by state-controlled Emirates Telecommunications to acquire a large stake in Vodafone represents a national security risk, the UK government said late on Wednesday.

Officials said the companies must take steps to mitigate that issue given Vodafone’s importance to the UK telecoms sector and its role as a government supplier.

Also known as e&, the Emirati group began building a stake in Vodafone in 2022 and last year increased its holding to almost 15 per cent. It is the UK company’s largest single shareholder.

That announcement came only hours after the UK’s culture secretary Lucy Frazer ordered further regulatory scrutiny on public interest grounds of the £600mn bid for the Telegraph newspaper group by Abu Dhabi-backed investment group RedBird IMI.

While European countries’ unease with Mideast investment into the telecoms sector isn’t new, the government had not previously disclosed that it was reviewing the relationship.

The timing of the UK’s announcements could prove sensitive.

London is seeking to expand a “sovereign investment partnership” with the UAE, after the Gulf state exceeded the £10bn investment it pledged three years ago.

Free trade negotiations are also continuing between the UK and the six-member Gulf Cooperation Council that includes the UAE.

The telecoms scrutiny could lead to some awkward phone calls, to say the least.

Mountains and snowballs (no, it’s not Davos)

In China, brokerages and private wealth managers have been selling complicated derivatives known as “snowballs”, which offer high yields as long as volatility is low. 

Here’s how their pitch goes, according to the head of one brokerage firm: “The sales team will start the marketing by asking this to their clients: do you believe the CSI 500 could fall by more than 20 per cent? If not, you should buy a snowball as a safe bet.”

But a protracted stock market rout since late 2023 means heavy losses for retail investors who loaded up on the products. “I feel helpless and guilty,” 34-year-old clerk Stephanie Liu told the FT’s Cheng Leng. “It is a situation that has no solution.” 

Over at FT Alphaville, Bryce Elder has an in-depth explanation of a structure that has been associated with “some legendarily dumb trades”. 

Some analysts fear this funky-sounding structured product is exactly the sort of thing that could exacerbate problems in China’s vast market. Bryce, however, thinks they might be “making a mountain out of a snowball”.

Job moves

• Top Tier Capital Partners has named Jonathan Biggs and Michelle Ashworth as partners based in London. Biggs joins from SVB Capital, while Ashworth was previously head of venture at the Church of England’s investment fund.

• Indian ride-hailing company Ola Cabs has hired Hemant Bakshi, a former Unilever executive, as its chief executive, Bloomberg reports.

• Hunter Point Capital, the alternative investment shop co-founded by Bennett Goodman, has hired Phillip Titolo as its head of insurance solutions. Titolo previously worked at MassMutual.

• Tax attorney Adam Arikat has joined law firm Simpson Thacher from Kirkland & Ellis.

• Freshfields has appointed Charlotte Colin-Dubuisson as a Paris-based partner on its antitrust team. She was previously at Linklaters.

• Ross Levinsohn, a director at The Arena Group, the publisher of Sports Illustrated, has resigned as a director, stating in a filing the “abhorrent actions of this board over the past six weeks leave me no choice but to resign”.

Smart reads

Boring rerun US cable news viewers are just not getting into the 2024 presidential race, FT reports. The main reason? “It’s a sequel to a movie you weren’t crazy about to begin with,” said Jonathan Klein, who ran CNN from 2004-10.

Pocket money Americans are becoming more southern European than they realise, as about two-thirds of adults still get financial support from their parents, according to The Wall Street Journal.

AI fake news The rise of artificial intelligence is leading to ever more potent deep fakes. It’s only a matter of time before a clever, well-timed piece of disinformation has a calamitous impact, writes economist Tim Harford for FT Magazine.

News round-up

Lightspeed taps private equity playbook as it eyes $1bn asset sale (FT)

Blackstone plans deal spree to pre-empt market revival (FT)

New York-based PR firms plan merger under WPP overhaul (FT)

Big Tech’s AI partnerships draw inquiry from FTC (FT)

Just what is Vistra Energy up to in its TRA buyout? (FT Alphaville) 

Donald Trump warns Nikki Haley’s billionaire backers to halt support (FT)

Tesla shares drop 12% after sales growth warning (FT)